Russian troops fought fierce street battles Tuesday with Chechen rebels who reportedly seized 2,000 hostages at a hospital in southern Russia.

At least 16 people have been killed since the rebel attack began in Kizlyar in the republic of Dagestan, 60 miles northeast of the Chechen capital of Grozny.The rebels demanded that Russia withdraw its troops from Chechnya and end its 13-month war against separatists there. They said they will shoot the hospital patients and workers if their demands are not met.

According to the ITAR-Tass news agency, the rebels shot and killed two of the hostages. It quoted an unidentified civilian who was a member of a group trying to start negotiations with the rebels.

The Interfax news agency quoted the Russian Interior Ministry as saying the rebels were holding 2,000 people hostage. Earlier, Ibragim Ibragimov, health minister of the republic of Dagestan, where Kizlyar is located, was reported as saying the rebels were holding at least 1,000 hostages.

The number of hostages appeared to have risen after the rebels seized more buildings in Kizlyar.

Hundreds of Russian troops surrounded the medical center.

Rebels were shooting at the Russian troops from inside the hospital, using hostages - including women in the maternity ward - as cover, said Leonid Golovnyov, a spokesman for the Ministry of Interior in Moscow.

The hostage-taking was reminiscent of a rebel attack in June in the city of Budyonnovsk, where Chechen fighters seized more than 1,000 hostages to demand an end to the war in Chechnya. More than 100 people died in that confrontation.

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In Moscow, an angry President Boris Yeltsin convened his powerful Security Council Tuesday and berated top officials for letting the rebels slip into Dagestan.

"The border guards overslept," Yeltsin said, demanding to know why Russian forces had been unable to stop the rebels.

The rebels are reportedly members of a group called "Lone Wolf," founded last year by Salman Raduyev, the son-in-law of rebel leader Dzhokhar Dudayev, who is in hiding.

Raduyev formerly was a senior official in Gudermes, the second-largest city in Chechnya. The city was the scene of a bloody battle in December, which ended when Russian troops drove out the rebels.

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